To elevate or to duplicate? Experiential learning,host-country institutions,and MNE post-entry commitment increase

A multinational enterprise’s (MNE) decision to commit more resources to a host country operation is a key aspect of internationalization. MNEs can change their foreign operation mode in several ways in order to increase host-country commitment after initial entry, but existing theory on mode changes provides little guidance on what drives MNEs to increase commitment in a certain way over another. In this paper, we differentiate between mode duplication, whereby an MNE replicates an existing operation mode in a host country, and mode elevation, whereby an MNE establishes a new, different mode of operation either in lieu of or in addition to an existing one. We subsequently leverage learning theory to argue that both deeper international experience and broader international experience increase the likelihood of implementing a mode elevation rather than a mode duplication due to the higher complexity of the former. We further argue that these relationships are not uniform across different levels of host-country institutional quality. We test our hypotheses in a primary dataset of 80 Austrian MNEs implementing 527 mode changes while internationalizing into 21 countries in Central and Eastern Europe over 24 years, and find support for our theory. Overall, this study contributes to the international business literature on mode changes by offering theory and evidence regarding the drivers of whether an MNE increases foreign commitment by establishing a new operation mode or by duplicating an existing one in a host country.     

Chief executive officers' dispositional optimism,host country's rule of law,and foreign market equity mode choice of Ghanaian small and medium‐sized enterprises

Despite a growing interest in the influence of managerial characteristics on firms' strategic decision‐making process, scholarly knowledge is limited with regard to how and when psychological attributes of executives affect firms' foreign entry mode decision. Building on behavioral decision‐making theory, we address this gap by investigating the effect of chief executive officers' (CEOs') optimism on firms' foreign market equity mode choice. In addition, we examine the moderating influence of the host country's rule of law on this relationship. Using primary data from 227 small and medium‐sized enterprises (SMEs) in Ghana, we found that increases in the levels of CEOs' optimism are related to the increases in preference for equity entry mode. This relationship is amplified when CEOs perceive the host country to have stronger rule of law. The findings have theoretical, managerial, and policy implications for SMEs' foreign market entry mode strategy.     

Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda

Despite significant differences between small and medium-sized enterprises (SMEs) and large multinational enterprises (MNEs), the majority of extant foreign market entry mode choice literature has focused on MNEs. The current state of knowledge regarding SME foreign market entry mode choice is equivocal. The present paper reviews the current state of SME foreign market entry mode choice literature and maps future research directions. To this end, we systematically analyze 33 relevant journal articles for their theoretical frameworks and contextual dimensions. Based on this review, we identify gaps in the literature and develop an agenda to guide future scholarship in this important domain of research in taking SME-specific characteristics into consideration.     

Subsidiary Capacity Building in Emerging Markets: How Japanese MNEs Sequence Market Entry and Development Strategies in India

This paper asks the pragmatic question of how and to what extent firms build subsidiary competitiveness over time. By merging international business and international marketing theory, we integrate the unconnected discourses on market entry, development, product sequencing, and diffusion. The context of our research questions is marketing and entry strategies of four Japanese firms in India. All have had to learn the sequencing of both entry and product diversification. While strategies vary between the firms, the cases exhibit that entry and product diversification decisions are interlinked. Market entry configurations are central for developing market‐led solutions in large emerging markets. This study offers insights into how Japanese MNEs build subsidiary competitiveness when faced with the early stages of the Indian consumer market take‐off. Second, through the integration of international business and international marketing theory, we find that new product performance and international diversification interact in specific ways, and this contributes to future theoretical developments. © 2015 Wiley Periodicals, Inc.     

The impact of manager's animosity and ethnocentrism on multinational enterprise (MNE) international entry‐mode decision

For MNEs, entry‐mode decision is undeniably critical. While the literature has identified several determinants of foreign entry‐mode choice, few have examined the impact of manager's animosity and ethnocentrism. This article is an attempt to fill this gap by examining the independent effect of manager animosity and ethnocentrism as well as the moderating effect of cultural intelligence on entry mode. Data were collected through surveys targeting upper‐level managers in the U.S., U.K., and Germany to examine how animosity and ethnocentrism would shape their decision to enter Iran, a host market largely perceived negatively in the West. Multivariate multiple regression was used to test the hypothesized effects and to capture the multidimensional aspect of entry modes. We found that, in general, manager's animosity and ethnocentrism do negatively affect the choice of an entry mode and that cultural intelligence has the potential to neutralize that negative effect.     

Direct foreign investment in japan as a means of market entry: The case of European firms 1

Japan, one of the world's largest and strongest economies, attracts a tiny level of inward direct investment. This neglect is particularly true of European multinationals. This article examines a sample of European companies which have Japanese manufacturing affiliates, to assess direct investment as a means of access to the Japanese market. It examines the objectives and strategies of entry and evaluates the outcome in terms of successful penetration of the Japanese market. The joint venture route is a preferred means of initial entry and the research allows evaluation of the advantages and disadvantages of this mode of entry to the Japanese market.     

A transaction cost perspective on foreign market entry strategies of US and Japanese firms

A large scale survey of top US and Japanese executives is conducted in order to assess the power of transaction cost economics (TCE) in explaining a firm's choice of entry mode (e.g., joint venture vs. full ownership) when it enters a foreign market. Results suggest that several TCE tenets are useful in explaining US firms' choice of entry mode. However, TCE predictions were not supported by the entry mode choices of Japanese firms. Implications of these findings for researchers and managers are discussed. © 1998 John Wiley & Sons, Inc.     

Sitting on the fence - Untangling the role of uncertainty in entrepreneurship and paid employment for hybrid entry

Prior research agrees that uncertainty in entrepreneurship shapes individuals' decision between hybrid and full-time entry, but largely neglects the role of uncertainty in paid employment. By theorizing that hybrid entrepreneurship is a portfolio of real options in entrepreneurship and paid employment, we argue that both uncertainty in entrepreneurship and paid employment as well as their interplay determine individuals' decisions regarding their mode of entry into entrepreneurship. We validate our theory using data from the Current Population Survey and the Study of Income and Program Participation and contribute to the hybrid entrepreneurship literature and research on uncertainty in entrepreneurship.     

Retailers׳ expansion mode choice in foreign markets: Antecedents for expansion mode choice in the light of internationalization theories

Whenever a retail company expands its store network in a foreign market, decisions have to be made about how this can be achieved. Existing studies of retail internationalization have usually analyzed the “entry mode” choice as an end in itself, and not as the start of a firm׳s international development. In addition, there is much debate in the academic literature about the antecedents for retail foreign operation mode choice and the relevance of generic internationalization theories to international retailing. Therefore, the objectives of this research are (1) to investigate the paths of entry and subsequent expansion modes pursued by retailers in international markets and (2) to develop and test a model of expansion mode antecedents in the light of generic business internationalization theories. This is achieved on the basis of data collected from 43 French fashion retailers and a PLS-SEM approach. Results show that (1) retailers clearly differentiate between entry and expansion modes; (2) the international marketing plan, the perceived attractiveness of the foreign market, and strategic and ownership conditions are the key antecedents for the choice of an expansion mode. After comparing the results with the explanations proposed by the generic internationalization theories, a multi-theoretical framework is proposed which draws from the Uppsala internationalization process model, network theory and the born-global theory. The findings provide a wealth of information for retailers׳ use in choosing appropriate foreign operation modes.     

Trends in international business thought and literature: A review of international market entry mode research: Integration and synthesis

Although entry mode strategy has traditionally been a central topic of research in international business, it is only recently that integrated research frameworks have developed. Largely in response to the dynamic reconfiguration of global business, these new insights from channel management, global strategy, alliances, and political economy have infused new perspectives into entry mode research. This article reviews and synthesizes this literature. Within an over-arching classificatory framework, central themes and sub-themes within this body of literature are identified and their inter-linkages investigated. The evolutionary process of entry mode research is examined. The article concludes with directions for future research and the need to integrate entry mode research with partnering strategies.     

Choice of Market Entry Mode in Emerging Markets

Summary

This study explores the antecedents of market entry strategy in emerging markets and examines the market environmental, transaction-specific, competitive strategic factors and organizational capability that influence the choice of market entry mode. Empirical results based on a survey of Japanese companies support the combined relevance of their factors on choice of market entry mode in an emerging market. Although most of the mode of entry research assumes that the firm has the option to choose any entry mode in a given market, this study examines the impact of the factors in the internationalization process of firms. The results suggest that experiential knowledge has an immense impact on the choice of entry mode in China, an emerging market with high environmental uncertainty, but also high market potential. The empirical findings also show the important influences of risk-absorption capability and risk-dispersion mechanism on the choice of entry mode into the Chinese market.     

企业国际化经营的市场进入方式选择

随着世界经济一体化进程的加快和我国成功地加入世贸组织,企业越来越普遍地从事国际化经营活动。正确选择市场进入方式是企业国际化经营成败的关键。本文着重分析了影响进入方式选择的主要因素,并基于这一领域的交易成本理论、组织行为理论、折衷理论等尝试构建了一个企业国际化经营的进入方式综合决策模型,以期对我国企业实施“走出去”战略提供有益的借鉴。     

What makes transplants thrive: managing the transfer of “best practice” at Japanese auto plants in North America

Multinational companies are a conduit by which superior organizing principles can be transferred across national, institutional, and cultural environments. However, for such transplantation efforts to be successful, the companies face the challenge of adapting their practices and principles to the requirements of local environments. In the process they risk losing the performance benefits from those practices. In this paper we study the North American transplant production facilities of Japanese automobile producers—companies known for their ability to achieve superior labor productivity and quality in their manufacturing plants, along with high levels of product variety—for insight into how the practices associated with superior performance (including work systems, technology choices, and supplier relations) can be implemented outside of Japan. By comparing the Japanese transplants with automobile plants in Japan, and Big 3 plants in North America, we show that the extent of transfer varies by type of practice. Furthermore, we find that plants can shape and alter their external environment, and can also buffer themselves from it. Despite these modifications, we find that the transplants are able to achieve productivity and quality levels similar to plants in Japan.     

Entry mode choice of Chinese enterprises: The impacts of country risk, cultural distance and their interactions

Recent years have witnessed a phenomenal growth in the number of Chinese enterprises “going global.” Drawing on three leading theoretical perspectives including the transaction cost theory, organizational capability theory and eclectic theory, this paper develops hypotheses to test how country risk and cultural distance are associated with entry mode choices of enterprises from China. Based on a sample of 167 Chinese companies, an empirical investigation has been conducted employing logistic regression and hierarchical regression analyses. Our results show that country risk and cultural distance have significant impact on entry mode choice. With the increase of country risk or cultural distance, businesses prefer non-ownership-based entry modes such as trade and licensing. However, entry mode choice is also noticeably influenced by the interaction between country risk and cultural distance, which is a new finding of international entry mode research. Furthermore, private enterprises are more likely to adopt high-involvement entry mode than the state-owned enterprises, and service enterprises are less likely to use high-involvement entry mode, which suggests that different approaches are used to deal with country risk and cultural distance by various types of enterprises.     

Changes in foreign operation modes: A review and research agenda

This paper addresses the growing but fragmented research area of changes in foreign operation modes. Previous research claims this field to be under-researched and at the same time more complex than hitherto assumed. Moreover, a majority of studies investigating mode change include the topic rather inexplicitly. In consequence, literature on mode change is fragmented across different research streams and is characterized by incoherent nomenclature, a variety of research foci as well as results that are hard to compare. By conducting a structured literature review we consolidate existing findings, provide a deeper understanding of firms’ foreign operation mode change, related theoretical perspectives, and its antecedents and consequences. Based on our findings we discuss relevant areas for future research in this research field.     

Early internationalization and subsequent geographic expansion: An extended Penrosean perspective

Internationalization is, by nature, a dynamic and continuous process that unfolds over time. However, the extant literature on international entrepreneurship primarily focuses on the antecedents that influence the initiation of internationalization and downplays its post-entry process. Specifically, little research has examined how early internationalization relates to subsequent geographic expansion. To bridge this gap, we draw upon Penrose’s theory of firm growth and a judgment-based view of entrepreneurship. We posit that earlier resource commitment to foreign countries enables entrepreneurs to quickly start managerial learning based on their experience of experimentation activities in foreign markets, facilitating entry into new foreign markets. Especially, we hypothesize that the operational experience acquired through earlier foreign direct investment is positively associated with subsequent geographic expansion, and the location where to accumulate operational experience moderates the association. The results of our longitudinal 19-year (2000–2018) study on 75 Japanese early internationalizing firms provide evidence for our hypotheses.     

A note on the “unique” business cycle in the Keynesian theory

In this paper, we explore the existence and “uniqueness” of a limit cycle in the Keynesian theory. In a model with the simplest (linear) Keynesian consumption function and the logistic investment function based upon the profit principle, we establish the existence of a periodic orbit (irrespective of the speed of quantity adjustment) and, with the help of the theory on generalized Liénard systems, verify the uniqueness of it for the case in which the speed of quantity adjustment is large enough.     

Securing Diversity in Human Resources: Lessons from Malaysia

As the search for more responsive and robust forms of corporate governance continues internationally, this paper seeks to inform the current debate concerning the relative strengths and limitations of the Japanese system in the context of the rising demands and expectations of global investors. Using the current literature within the field and the annual reports of the top 50 Japanese companies, we look at the state of Japanese corporate governance now and its response to domestic and international pressures for change. The key findings suggest that despite the literature predictions and growing dissatisfaction with the model, Japanese corporate governance has been slow to change. The major exception appears to be an increase in merger and acquisition activity, but even this was found to be along distinctively Japanese lines. Finally, we assess the future implications for developing forms of corporate governance in both East and West.     

Antecedents and consequences of effectuation and causation in the international new venture creation process

The selection of the entry mode in an international market is of key importance for the venture. A process-based perspective on entry mode selection can add to the International Business and International Entrepreneurship literature. Framing the international market entry as an entrepreneurial process, this paper analyzes the antecedents and consequences of causation and effectuation in the entry mode selection. For the analysis, regression-based techniques were used on a sample of 65 gazelles. The results indicate that experienced entrepreneurs tend to apply effectuation rather than causation, while uncertainty does not have a systematic influence. Entrepreneurs using causation-based international new venture creation processes tend to engage in export-type entry modes, while effectuation-based international new venture creation processes do not predetermine the entry mode.